Barack Obama has edged closer to giving US corporations an amnesty on bringing
offshore funds back home, in a move that could have a major impact on
American investment in Britain.

Speaking at the opening of an Amazon warehouse in Tennessee, the President laid out proposals to overhaul America’s corporate tax system as part of a “grand bargain” designed to help create jobs in the US.

He said he would be willing to cut corporate taxes and simplify the system, as long as the US could use any money raised to help bring more Americans back into the workforce.

“Here’s the bottom line: I’m willing to work with Republicans on reforming our corporate tax code, as long as we use the money from transitioning to a simpler tax system for significant investment in creating middle class jobs. That’s the deal,” he said.

The reforms would include a cut in the corporate tax rate from 35pc to 28pc, with a special rate of 25pc for manufacturing firms. They are also likely to include a one-off flat fee on the $2 trillion of profits which American companies hold overseas, and which currently go untaxed unless they are repatriated.

The proposals were immediately rejected by the Republicans, who are pushing for even lower tax rates, and reject the idea that Mr Obama would use any revenue raised to launch new projects.

Mr Obama did not go into detail, but the plan echoes a proposal laid out in 2011 by Dave Camp, chairman of the House Ways and Means Committee. Under Mr Camp’s plans, companies would have to pay a 5.25pc fee on any profits they had overseas, but they would then be able to bring those funds back into America without further penalties.

At the moment, companies bringing profits back into the US are obliged are faced with a 35pc tax bill

The issue has become a major headache for American corporations such as Apple, which is thought to keep around $100bn on its $145bn cash hoard outside the US, partly to avoid a massive levy. Tim Cook, chief executive of the iPad maker, told Senators in May that he wanted to see a “dramatic simplification” of America’s tax law.

However, the so-called repatriation tax has unexpected benefits for many overseas companies, including those in Britain. US businesses forced to keep their funds off shore have to find other ways to put that money to work, fuelling investment and acquisitions.

Often the prospect of a major tax bill has inflated prices US companies are willing to pay for companies, which has a knock-on effect on companies across the board.

The repatriation tax is thought to have been a factor in Microsoft's $8.5bn purchase of Skype, which is based in Luxembourg, and Hewlett-Packard’s $11.1bn swoop on the British software firm Autonomy.